ENERGY EFFICIENCY

The art of luring 'poor' cities into energy-saving projects

Ellen M. Gilmer, E&E reporter

Climatewire: Monday, June 27, 2011

The decay of Michigan's many rusted-out towns doesn't strike most as fertile ground for any kind of green movement. But entrepreneur Sean Reed sees the state as a prime spot for energy efficiency measures to take root.

Through the Clean Energy Coalition, where he is executive director, Reed is aiming to bring those cash-strapped cities into the sustainability fold by making available more clean energy technology in the local building and transportation sectors.

Change, though, is not likely to come easily.

One CEC project -- Cities of Promise -- targets municipal energy use in struggling communities, like Flint and Hamtramck. Using a $4.4 million grant issued last year by the Michigan Public Service Commission, CEC has performed energy audits of city-owned and -operated buildings in eight towns.

Detroit's 36th District Court building, which sees more than 500,000 cases annually, will see major lighting and heating, ventilation and air conditioning upgrades as well as a new 20-kilowatt solar array. Photo courtesy of the Clean Energy Coalition.

Based on the evaluations, CEC has recommended efficiency actions. Some are as simple as vending machines whose lights turn off when not in use. Others are more involved, such as new rooftop solar arrays. Resulting utility savings will be collected and put in a revolving energy fund to be applied to future efficiency projects.

What CEC is finding, though, is that some of the cities' needs are just plain basic.

In Benton Harbor, for example, the nonprofit quickly learned that proper insulation and roofing took priority over advanced efficiency efforts.

"They were appalled" during the initial assessment, said Joe Harris, the city's emergency financial manager. Extension cords ran across the civic building to power space heaters, and buckets lined hallways of the police department to collect water from the leaky roof.

"We're a poor city," he said. "The city's facilities were in dire need of repairs and replacements."

"We've realized we have to make an investment in general," Oorbeck said. "We're going to have to pick investments that don't have an immediate payback."

Roof work is under way in Benton Harbor this week.

Plugging renewable energy into the Rust Belt

All participating cities have signed on for the revolving energy fund CEC has organized. The account will pay for a city energy manager and additional efficiency projects.

It is that long-term funding mechanism that Reed said is key to CEC's mission. Instead of a one-time handout, the establishment of a revolving fund gives the cities a path to continue investing in efficiency.

The trickle-down of energy efficiency measures from trendsetting places like San Francisco and New York to working-class towns in the Rust Belt and elsewhere can be linked to plain financial sense, said Uwe Brandes, vice president of initiatives at the Urban Land Institute.

"In this era of belt-tightening, people are looking to minimize their operations budget and trying to find value where they can," Brandes said.

Rich LaBombard, engineering assistant for the city of Saginaw, said the savings are already evident.

Saginaw's improvements, as recommended by the CEC, include a solar array on its 87,000-square-foot public works building, the conversion of 77 traffic signals to light-emitting diode bulbs and the conversion of 587 streetlights to induction technology, a type of lighting that is cheaper than LED but more efficient than fluorescent.

Solar panels will yield projected annual savings of about $3,700 a year, the new traffic signals will save nearly $44,000, and the streetlights will save Saginaw about $30,500 annually.

"If it wasn't for the Clean Energy Coalition, we sure wouldn't be doing that," LaBombard said.

Brad Dick, director of Detroit's General Services Department, said the funds played a role in allowing the city to avoid layoffs. Additional benefits, according to CEC, could include job creation for project contractors, reduced maintenance costs, the ability of partner cities to attract additional funding and the ability to expand efficiency programs to residential and commercial sectors.

Other cities in the program are Highland Park, Muskegon Heights and Pontiac.

Saving money sells

CEC had humble beginnings. After its 2006 launch, Reed says his office was just him, sitting alone at a folding table. Five years and several office upgrades later, the Ann Arbor-based nonprofit has 6,000 square feet, 17 full-time employees and a steadily expanding web of urban green enterprise throughout the state's down-and-out cities.

Saginaw is retrofitting its old incandescent four-way signals to induction technology, expected to save the city about $30,500 annually. Photo courtesy of the CEC.

"We keep on expanding," he said. "The growth has been fantastic."

It is a testament both to the CEC's entrepreneurial spirit and the growing demand in industrial cities for energy efficiency infrastructure.

"A lot of cities are leaders in this area," said LeAnn Oliver, of the Energy Efficiency and Renewable Energy division of the Department of Energy. "They recognize the benefits of reducing carbon emissions and making their air quality better."

And those that do not recognize the environmental benefits usually still take note of the potential effect on their pocketbooks.

"Saving money is a very tangible incentive," Oliver said. "That's easier to explain to people."

The CEC appealed to that logic when trying to bring cities on board for the revolving energy fund program.

Investing multiplies savings

"They're not at a place where we can talk about GHGs and climate change with them," said Oorbeck, the project manager.

Instead, the numbers talk.

Assuming an original investment of $463,000 (the approximate amount awarded to each city) with a five-year payback, the CEC estimates that without a revolving fund, a partner city would save a little under $100,000 per year on energy costs.

With a revolving fund, however, the savings increase in steps over the years: about $100,000 during each of the first couple years, up to $200,000 annually after the fourth year, and a jump to $300,000 at the nine-year mark. Based on that CEC modeling, a city could accumulate $915,000 more over a 10-year span if it uses a revolving energy fund instead of simply investing the original amount and raking in the savings.

Oliver, of EERE, compares revolving funds to gifts that keep on giving. But, she notes, "one size does not fit all for communities. They have different needs, different economic segments that play roles in their circumstances."

The backing of nonprofits like CEC works in complement to private investment, government incentives and other funding sources, she said.

That is to say, after boilers are replaced and buildings insulated, it will likely take an assorted crew of planners and financiers to get loftier sustainability goals off the ground. But to CEC, there is no question of Michigan's demand.

"There's a lot of opportunity in this arena," Oorbeck said. "Sustainability work hasn't been happening, and there's a surge of interest."

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